Taxability Determinations — Insights From Tax Specialists

Online Auto Parts Company Rocked with $8M Transaction Tax Assessment

Recently, the Arizona Court of Appeals (Court) determined the Wisconsin headquartered online auto parts retailer RockAuto, LLC (RockAuto) had established substantial nexus in Arizona through its network of distributors, vacating and remanding the tax court’s decision. With a twist of fate regarding the tax court’s decision favoring RockAuto, the online retailer now faces a liability in excess of $8 million of tax, penalties and interest assessed by the Arizona Department of Revenue (Department).

Former Officer Liable for $56k of Unpaid Tax After 10-Year Appeal

In a recent decision, the Nebraska Supreme Court (Court) held a company officer personally liable for over $56,000 in unpaid use tax, penalties and interest. The officer was the former president of Direct Media, Inc. (Media) a direct mail processing company which ceased operations in 2011. The Court’s ruling affirmed the lower court’s determination that the officer was the company’s responsible officer in charge of managing the business’ finances and thereby responsible for the unpaid tax.

Tax, Sales & Use Tax, Audit Notices, Appeals, Taxability DeterminationsLisa CivitellaApril 3, 2024Comment

IL Appeals Court Rejects $162.7M Sales Tax Refund Claim on Aviation Fuel

The Illinois Appellate Court denied a $162.7M refund claim from American Aviation Supply, LLC (American) after determining that a sales tax exemption for property bought and stored temporarily in Illinois did not apply to the company’s sales of aviation fuel. In doing so, the Court affirmed the Illinois Independent Tax Tribunal’s (Tribunal) decision, which found that the exemption did not apply because the fuel was not consumed solely outside of the state. Because approximately 2% of the fuel was consumed in Illinois, the entire sale is subject to tax.

Tax, Sales & Use Tax, Audit Notices, Appeals, Taxability DeterminationsLisa CivitellaMarch 20, 2024Comment

Sheetz Sales Tax Issue Bubbles Over to Perrier

Sparked by ongoing litigation in a class action lawsuit by Sheetz, Inc. (Sheetz), the Pennsylvania Commonwealth Court (Court) is reviewing whether Perrier water is classified as “water” or a “soft drink” for sales tax purposes. The dispute arose after a class action lawsuit was filed against Sheetz, in which the plaintiff alleged that Sheetz incorrectly charged and collected sales tax on nonflavored mineral water such as Perrier. Now, the Court must decide if the characteristics of Perrier water, including the bottling process and the carbonation, are more aligned with the definition of “water” or a “soft drink” for Pennsylvania sales tax purposes.

Tax, Sales & Use Tax, Audit Notices, Appeals, Taxability DeterminationsLisa CivitellaMarch 7, 2024Comment

Netflix Challenges Streaming Services Taxability

Netflix, Inc. (Netflix) began a long, arduous battle against the Colorado Department of Revenue (Department) regarding the state’s position on the taxability of Netflix’s streaming services. Now, Netflix is seeking a refund of tax paid to the Department based on three arguments: (1) Netflix’s streaming services do not involve the transfer of a physical product, (2) Netflix’s Terms of Use do not grant tangible personal property to the users, and (3) the services are provided on a month-to-month subscription basis that does not qualify as a sale.

Tax, Sales & Use Tax, Audit Notices, Appeals, Taxability DeterminationsOlivia MascharkaFebruary 8, 2024Comment

True Object Test Successfully Applied in Tennessee DOR Sales Tax Ruling

In a redacted ruling applying the true object test, the Tennessee Department of Revenue held that the use of the taxable components was merely incidental to the overall transaction involving both taxable and non-taxable items.

Taxability DeterminationsLisa CivitellaNovember 22, 2022

Insights

Stay on top of the tax issues affecting your industry and company. Our leadership team shares its views on salient tax issues as well as actionable information.